Congress restores state Medicaid control, adds $50B for rural hospitals
S. 2279 — Protect Medicaid and Rural Hospitals Act · Filed by Josh Hawley (R-MO) · Introduced Jul 15, 2025 · Referred to committee
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What it does
This bill repeals two Medicaid provisions from the One Big Beautiful Bill Act (Public Law 119–21): Section 71115, which changed how states can tax Medicaid providers, and Section 71116, which changed how states can direct Medicaid payments. It also rescinds the appropriations tied to Section 71116. Additionally, the bill adds $50 billion in new federal funding ($10 billion per year from 2031–2035) to the rural health transformation program under Medicaid. States regain authority over provider taxes and directed payments; rural hospitals receive a dedicated funding stream.
Why we flagged it
The bill's core function is to undo two Medicaid restrictions imposed by the One Big Beautiful Bill, restoring state authority over provider taxation and directed payments, while simultaneously injecting $50 billion into rural health infrastructure. It is a federalism-oriented reversal paired with targeted rural investment.
What the text implies
- Repeal of Section 71116 rescinds appropriations, freeing federal funds that may be redirected or deficit-reducing, depending on budget rules.
- Restoration of state directed-payment authority may enable states to channel Medicaid funds to preferred providers or systems, potentially creating inequities across state lines.
The full analysis lists 4 implications of this text.
Who stands to gain
rural hospitals and health systems; state Medicaid agencies; Medicaid providers in rural areas